FireEye's acquisition of Mandiant is getting generally positive reviews from industry analysts, though some caution that FireEye faces a big challenge in its goals related to blending the two security firms' products.

In announcing the $1 billion cash-stock deal last week to acquire Mandiant, FireEye indicated its intent to further integrate its virtual machine execution engine used to dynamically detect zero-day malware threats with Mandiant’s endpoint software for threat detection, response and forensics. FireEye had already done some work in this direction with Mandiant as a partner, just as it also has Bit9, Blue Coat’s Solera and Guidance Software as partners.

But now that FireEye has bought Mandiant outright, FireEye now becomes a “much more formidable company” because it gains an endpoint platform, plus additional security intelligence to augment FireEye’s own, says Jon Oltsik, senior principal analyst at Enterprise Strategy Group. Oltsik goes so far as to call the FireEye/Mandiant merger is a “game-changer.”

But other industry observers, including Gartner research director in network security products, Lawrence Orans, and Richard Stiennon, senior research analyst at IT-Harvest, are somewhat less sanguine about it all.

There’s no denying there’s plenty of “synergy” between FireEye and Mandiant, says Orans. He notes there’s virtually no product overlap between FireEye’s sandboxing technology for payload detection, which an estimated 30% of FireEye customer deploy in-line for blocking purposes, and Mandiant’s endpoint incident response and forensics capabilities. But he points out that FireEye still faces the huge challenge of trying to get customers to adopt yet another endpoint agent, something that network security vendors have often found to be a very difficult thing to accomplish.

Stiennon says “the trouble with blending the products is that it may limit options for customers. Today customers can purchase Guidance Software or Bit9 (or Mandiant) endpoint products to help track down indicators of compromise. It is hard to give preferential treatment to your own solution while still maintaining partner relationships.”

Mandiant, which disclosed it earns about half of its annual income through services, is often called in after a data breach by attackers has occurred, and its expertise lies in determining the extent of the impact and tracking down the attackers. Mandiant has many competitors in terms of regional service firms that can respond to breaches, Stiennon says. Mandiant’s merger into FireEye could mean increased competition to hire the skilled analysts needed to do this kind of work.

Stiennon regards the $1 billion valuation assigned to Mandiant in the stock-cash deal with FireEye as excessive. He suggests Wall Street may be losing perspective on just how small FireEye, which had a successful IPO last September, is in relation to other players in the network security industry.

“At $155 million in projected 2013 revenue, FireEye is just a little bigger than Imperva and smaller than Barracuda,” Stiennon notes. “Yet Wall Street values FireEye more than Fortinet, Palo Alto Networks or Trend Micro. Post deal announcement, FireEye is valued at half of Check Point Software, which has almost 10 times the revenue.”

Stiennon says “FireEye’s strategy is clear. Use over-valued stock to acquire companies with revenue to feed Wall Street’s expectations of rapid growth. Organic growth for such a small company is going to be difficult, especially when its well-entrenched competitors are introducing directly competing capabilities in their widely deployed platforms.”

Stiennon says Fortinet and Palo Alto have already introduced advanced malware defenses as virtualized “sandboxes” that “detonate” incoming executables to detect malware without signatures with their firewall appliances. Trend Micro’s Deep Discovery is another standalone sandboxing environment, he notes. There are others as well.

The FireEye/Mandiant combination bears some comparison to Cisco’s acquisition of Sourcefire, with its intrusion-prevention and FireAMP advanced malware detection system, says Orans. He notes FireEye is also in beta with an IPS, with general availability later this year.